Columns 1 through 4 in the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasingvarious amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the price ofgood A is $18, the price of good B is $6, the price of good C is $4, and the price of good D is $24. Ricardo's income is $106.Column 1Units of A1234B=567Bunits.C= 3 units.MU7254453627181512Unit A4 +5 18Units of B123Column 2145678MU241512Unit B97521+0 6Units of C123Instructions: Enter your answers as whole numbers.a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility?A = 4 units.456Unit C7Column 38MU151287543.53Amount ofSavingsGUnits of D124234D-0 units.b. How many dollars will Ricardo choose to save? $c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.56Column 478MU3630241813742Number ofDollarsSaved$1234567Column 58MU543210.50.250.125

There are two conditions that need to be fulfilled when deciding the utility-maximizing bundle. Law…

Columns 1 through 4 in the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the price of good A is $18, the price of good B is $6, the price of good C is $4, and the price of good D is $24. Ricardo's income is $106. Units of A 1 2 3 4 5 Column 1 C= D= 6 7 8 3 units. 3 units. o units. MU 72 54 45 36 27 18 15 12 Unit A +6 Unita of B 1 2 3 4 .. 5 6 7 8 Column 2 MU 24 15 12 Unit B 9 7 5 2 1 Units of C 1 2 3 4 5 6 Instructions: Enter your answers as whole numbers. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? A= 4 units. в- 7 Unit C + Column 3 8 MU 15 12 8 7 5 4 3 Units of D 1 Amount of Savings 09 24 2 3 4 5 Column 4 6 7 8 b. How many dollars will Ricardo choose to save? $ c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule. MU 36 30 24 10 13 7 4 2 Number of Dollars Saved Column 5 $1 2 3 4 5 6 7 8 MU 5 4 3 2 1 0.5 0.25 0.125

Columns 1 through 4 in the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the price of good A is $18, the price of good B is $6, the price of good C is $4, and the price of good D is $24. Ricardo's income is $106. Units of A 1 2 3 4 5 Column 1 C= D= 6 7 8 3 units. 3 units. o units. MU 72 54 45 36 27 18 15 12 Unit A +6 Unita of B 1 2 3 4 .. 5 6 7 8 Column 2 MU 24 15 12 Unit B 9 7 5 2 1 Units of C 1 2 3 4 5 6 Instructions: Enter your answers as whole numbers. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? A= 4 units. в- 7 Unit C + Column 3 8 MU 15 12 8 7 5 4 3 Units of D 1 Amount of Savings 09 24 2 3 4 5 Column 4 6 7 8 b. How many dollars will Ricardo choose to save? $ c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule. MU 36 30 24 10 13 7 4 2 Number of Dollars Saved Column 5 $1 2 3 4 5 6 7 8 MU 5 4 3 2 1 0.5 0.25 0.125

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter20: Consumer Choice And Elasticity

Section: Chapter Questions

Problem 4CQ

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Columns 1 through 4 of the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are $18, $6, $4, and $24, respectively, and that Ricardo has an income of $105. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? How many dollars will Ricardo choose to save? Check your answers by substituting them into the algebraic statement of the utility‑maximizing rule. In other words, show it works when using this rule.
Columns 1 through 4 of the accompanying table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are $18, $6, $4, and $24, respectively, and that Ricardo has an income of $105. Column 1 Column 2 Column 3 Column 4 Units Units Units Units of A MU of B MU of C MU of D MU 1 72 1 24 1 15 1 36 54 15 12 2 30 3 45 3 12 3 8. 3 24 4 36 4 7 4 18 27 7 5 5 13 6 18 6 5 6 4 6 7 7 15 7 2 7 3.5 7 8 12 8 1 8 3 8 2 а. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many dollars will Ricardo choose to save? c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule. In other words, show it works when using this rule.
Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are, respectively, $18, $6, $4, and $24 and that Ricardo has an income of $106. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? b. How many dollars will Ricardo choose to save? c. Check your answers by substituting them into the algebraic statement of the utility-maximizing rule.
25 Columns 1 through 4 in the following table show the marginal utility, measured in utils, that Ricardo would get by purchasing various amounts of products A, B, C, and D. Column 5 shows the marginal utility Ricardo gets from saving. Assume that the prices of A, B, C, and D are, respectively, $9, $3, $2, and $6 and that Ricardo has an income of $71. Column 1 Column 2 Column 3 Column 4 Column 5 Units of Good A Units of Units of Units of MU MU MU MU Good B Good C Good D Number of Dollars Saved MU 1 72 1 24 1 15 1 36 1 5 2 54 2 15 2 12 2 30 2 4 3 45 3 12 3 8 3 24 3 3 4 36 4 9 4 7 4 18 4 2 5 27 5 7 5 5 5 13 5 1 6 18 6 5 6 4 6 7 6 0.50 7 15 7 2 7 3.5 7 4 7 0.25 8 12 8 1 8 3 8 2 8 0.13 Instructions: Enter your answers as a whole number. a. What quantities of A, B, C, and D will Ricardo purchase in maximizing his utility? 4 units of A 3 units of B units of C units of D b. How many dollars will Ricardo choose to save?
John likes Coca-Cola. After consuming one Coke, John has a total utility of 10 utils. After two Cokes, he has a total utility of 25 utils. After three Cokes, he has a total utility of 50 utils. Does John show diminishing marginal utility for Coke or does he show increasing marginal utility for Coke? Suppose that John has $3 in his pocket. If Cokes cost $1 each and John is willing to spend one of his dollars on purchasing a first can of Coke, would he spend his second dollar on a Coke, too? What about the third dollar? If John’s marginal utility for Coke keeps on increasing no matter how many Cokes he drinks, would it be fair to say that he is addicted to Coke? *use tables and/or graphs if possible, please original work
You are choosing between two goods, X and Y, and your marginal utility from each is as shown in the following table. If your income is $9 and the prices of X and Y are $2 and $1, respectively, what quantities of each will you purchase to maximize utility? What total utility will you realize? Assume that, other things remaining unchanged, the price of X falls to $1. What quantities of X and Y will you now purchase? Using the two prices and quantities for X, derive a demand schedule (a table showing prices and quantities demanded) for X.
Suppose the utility function for goods x and y is given Utility = U(x,y) = 2x+y Suppose price of both x and y is $1. You have total $10 to spend, calculate the amount of good x and y you are willing and able to buy? Suppose price of x changed to $4. Price of y and your disposable income remain the same: i. calculates the change in the amount of good x, that is caused by the substitution effect (the effect on consumption due to a change in price holding real income or utility constant). ii. calculate the change in the amount of good x, that is caused by the income effect (the effect on consumption due to a change in real income caused by a change in price).
Exercise 2: 1. The table below shows the marginal utility of good A, good B and good C for Betty. Marginal Utility for good A (MU.) Marginal Utility for good B (MU.) Marginal Utility for good C (MU.) Unit of goods 1 18 39 12 2. 16 36 10 14 33 4 12 30 10 27 6 24 Suppose Betty has RM26 to spend on these three goods. The prices of good A, good B and good C are RM2, RM3 and RMI, respectively. What combination of three goods should be purchased in order to maximise utility? a. b. Based on the answer 1(a), what is the total utility derived by Betty? C. Distinguish between "total utility' and 'marginal utility. d. Briefly explain the TWO (2) conditions that must be fulfilled for a consumer to maximise utility. e. Define the Law of Diminishing Marginal Utility
2. Tom spends all his $100 weekly income on two goods, apples and bananas. His utility function is given by U (A, B) = AB, where A and B stand for the quantity of apples and bananas consumed by Tom. If PA = $4 and PB= $10, how many apples and bananas will he consume? Make sure you write out the utility maximization problem explicitly, including the decision variable(s). What if his utility function is given by U (A, B) = A0.5B 0.5?
A consumer is choosing between magazines and books. His set of consumer optimums are shown on the graph to the right. 50 Consumer income allocated for these two goods is equal to $150. The price of 45 magazines (P,) is equal to $5.00. 40- How do these changes in the price of books affect the demand for magazines? 35- 30- 25 NN 20- demand remains constant 15- PCC demand increases 10- 5- demand decreases 0- Ó 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 Books étv 21 MacBook Air 80 DII F5 F6 F7 F8 F9 F10 F1 F2 F3 ! @ $ & * 1 2 3 4 6. 7 Q W E T U A S F H. J K L C V M option command command op ...- * C0 Magazines D
Sarah has a budget of 58. Her utility function if U(x,y) = x*y. %3D The price of good x is 1, the price of good y is 8. How many units of good x does Sarah consume? Answer: Type here to search 01/
4. The following data pertain to products A and B, both of which are purchased by Jay. Initially, the prices of the products and quantities consumed are: PA = $10; QA = 3; PB = $10; QB = 7 Jay has $100 to spend. After a reduction in price of B, the prices and quantities consumed are: PA = $10; QA = 2:5; PB = $5; QB = 15 Assume that Jay maximizes utility under both price conditions above. Also, note that if after the price reduction enough income were taken away from Jay to put him back on the original indifference curve, he would consume this combination of A and B: QA 1:5; QB = 9 Determine the change in consumption of good B due to the (1) the substitution effect and (2) the income effect using Hicks decomposition.